by Caitlin Kenney

A federal judge has overturned a $33 million settlement between Bank of America and the SEC over bonuses paid to Merrill Lynch executives. Bank of America acquired Merill late last year — the bonuses were paid just before the two merged. U.S. District Judge Jed Rakoff called the settlement a "trivial penalty for a false statement that materially infected a multi-billion-dollar merger."

From the New York Times:

The judge also criticized the S.E.C., which has been trying to step up the profile of its investigations unit. The judge quoted Oscar Wilde's "Lady Windermere's Fan" in the end of his ruling to say that a cynic is someone "who knows the price of everything and the value of nothing."

The proposed settlement, the judge continued, "suggests a rather cynical relationship between the parties: the S.E.C. gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger; the bank's management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth."

The SEC had accused Bank of America of misleading shareholders about bonuses paid to Merrill Lynch employees. Judge Rakoff ordered the two sides to prepare for a trial to begin before February 1.